and this specific subject request to release the reserve of $51,218 will pay for 292 hours of that contract, we recommend that you release the reserved funds at $51,218. >> okay, thank you. >> colleagues any questions for our budget analyst? >> thank you very much. at this point we open it up to public comment? any members of the public that wish to comment on item number 6, step forward >> seeing none, public comment is closed. >> move approval. >> okay, we can move approval. item six and we can do that without opposition. >> item number seven. >> item number 7, resolution approving the airport advertising lease between clear channel outdoor ifrpged doing business as clear channel airports acting by and through the airport commission for a eight year term with a minimum guarantee of $10 million. >> thank you association we do

have cathy winer here. and government affairs, and manager for the san francisco airport. and let me say miss winer and to members of the public that are here as well as to the budget analyst, i think that we are likely to continue this item and that is the plan here to give mr. martin, who is the director of the airport time to come back as this one has some discussions around item number 7. and so i would ask that we actually keep presentations brief. we will open up to public comment, and members of the public comment. but, given that we will be hearing this item again in the near term future i ask that we keep the presentations shorter than perhaps thought of. >> understood. >> chair, farrell, cathy with the airport. i will just briefly layout the lease that is before you for the airport and clear channel for advertising at the airport. the proposed lease is a new lease for advertising at the

airport it has an 8-year term. and it has or carries a ten million dollar minimum annual guarantee. the lease is a result of a request for proposal process with the clear channel receiving the highest points of 3 proposals submitted. one of the proposers did file a protest. which the airport commission in consultation with the city attorney's office has found to be without merit. clear channels and $10 million, minimum annual guarantee, includes provisions for 169 advertising locations at the airport. and it is worth noting that that is in comparison to the current lease which has 286 sites, or 107 fewer advertising sites as a part of this lease. that is before you. >> the budget analyst report recommends that the resolution be continued so that the airport may come back and include a percentage rent structure in the lease, in addition to the mag that is

offered. the airport is supportive of the notion to continue so that we can get some clarity around some of these issues and i understand that there is a lot of discussion about this. but i just want to be clear that the airport made a business and policy decision to go with the mag only. based on the notion that has played out that we would receive higher, a higher mag offering. and it also helps us to control the limited space associated with this lease. percentage rent lease incentivizes a tenant to come back to us periodically to ask for opportunities to expand and we have not had good luck with that in the past. we are trying to be really consistent with the city's policy to limit the expansion of advertising on the city-owned property and so that is a part of what was taken into consideration when we moved forward with the mag only. i understand that the budget analyst has concerns with that, which you will hear about today. and i am sure, director martin

will be happy to come back and answer more specific questions around his thinking in this. >> thank you very much. >> colleagues, do you have any questions of the airport at this time? >> okay. >> supervisor avalos? >> just i know that we are going to have this come back and maybe when it does, you or john can touch about how or whether they are inside of the rfp there was a question to support local businesses. because that has been coming up in conversation that i have with people that one of the contractors is better at than and i am not sure if that was part of the scoring that went on and if you could touch on that when you return. >> do you want me to tell you what i know now? >> sure. >> briefly, it is my understanding that there was not a component in the rfp that addressed the lbe partnering but that the contracts before you does have that as well as i know that the proposal of the folks that protested the award

to clear channel. i know that they have a program as well. but the clear channel proposal before you does also have an lbe component to it even though it was not required as part of the rfp. >> thank you. thank you very much and i think as i mentioned before, i think that the questions that i like to understand are more around the other contracts that you have concession contracts at the airport and whether they have this dual structure and i would like to understand some clarity and other advertising contracts in the city of san francisco not just the airport as well as other major airports throughout the country, i want to get the list of the top ten and see how the bigger airports are handling this. >> supervisor mar? >> i appreciate your efforts to answer our questions, today. but i know that having mr. martin if we continue this, would be valuable as well. but i did want to just echo supervisor avalos comments that i think that local and disadvantaged contractors are really important in how you

insurance that contract maximize the participation of local businesses, but especially disadvantaged businesses. and then, i definitely want to hear more of the rationale for the mag only contract and i know that we will have that for a future time as well. but thank you. >> okay. >> thank you thank you very much, miss winer and we appreciate it. to the budget analyst report. >> commission chairman and members of the committee, as shown in the table on page 28 of our report, under the existing 12-year lease with clear channel which will expire on march 31, 2013, clear channel will pay the airport a total of $72.2 million, with such revenue paid by clear channel, increasing each year and in addition is showing in the table beginning on this year too. but, the percentage of gross revenues and this is a key point that the supervisors exceeded the annual rent in five of the eleven years or 45

over 45 percentage of the time. as a result, the airport realized additional rent revenues of $5 million compared to the minimum annual guarantee. we are talking about big bucks here, supervisors. and as you know this clear channel gross was $103 million. that is the column under gross revenue and if you add that up it is over $103 million. under this lease they would not pay a percentage of the gross revenues or a minimum guarantee, instead it will only pay the airport a minimum of $10 million which will be adjusted annually by a (inaudible). >> the airport did provide the budget analyst with a memo february, 28, 2013, that is on page 32 of our report showing attachment two to explain why the airport included the minimum annual guarantee, only for the structure and did not

also, but did not also include a percentage of the gross revenues which ever was higher as was contained in the existing lease, so they have gone in writing as to the reasons why they have not included a minimum annual guarantee and that is verbatim in the report. and the additional grocery receipts is a problem that auditing the additional gross receipts is a problem and budget and analysts believe that the airport should require the contract to devise a system which enable the airport to readily, audit them over the past of the existing use with clear channel. it should be noted that the existing lease with clear channel does provide for the percentage of rent and in fact, in thes only have audits been conducted but the percentage of gross revenue rent paid to the

airport by clear channel as i stated exceeded the minimum annual guarantee by $5.5 million, in five of the last eleven years. although the airport states and their memo that proposers would tend to submit a lower minimum annual guarantee when a percentage rent is included. and end of quote. and the airport has indicated that it would have never received ten million dollar minimum annual guarantee if they had included the percentage of gross, they was absolutely no documentation whatsoever, to substantiate that statement. if that were true, supervisors we questioned why the airport has hundreds of leases and have hundreds of leases in the past and presently have numerous leases, which in fact require both the percentage of the gross and the minimum annual guarantee. the airport has never here before suggested to the board of supervisors that all of the hundreds of leases which the

airport has submitted to the board of supervisors for approval that the airport will be getting a lower, minimum annual guarantee because of the airport's existing policy that in each and every one of those leases which required a minimum and a guarantee, it is required a percentage of gross. so this policy is completely different from the policy that the airport has advocated and is continuing to implement requiring both the minimum annual guarantee and a percentage of gross. there is nothing contained in that airport response, which would cause the budget and legislative analyst to withdraw the recommendation that the airport should incorporate a provision in the lease that would carry a percentage of gross or minute um guarantee whichever is greater as is the case with the khifting core channel. out of the hundreds of leases awarded by the airport, the airport could notify, we asked show us one other lease. where we are required a minimum

annual guarantee that you don'tryer a percentage of gross. the airport could not provide us with another lease. and as a matter of fact, mr. moore acknowledged and i am quoting him standard. that the other airports to charge lease rental revenues based on a percentage of the minimum annual guarantee. excuse me, whichever is higher. and in addition given that the proposed lease will extend to eight years and the rates of clear channel will charge to the advertising customers will likely increase significantly over the 8-year period. the lightly gross revenues to be realized by clear channel from the advertisers, the airport will likely also increase significantly over the eight-year term and is showing them the table in the report that those advertising revenues realized by clear channel increased from 8.1 million in 25, 26 to 13 million in 12-13. that is an increase of $4.9 million and nearly 60 percent

over eight years which is the same term of the proposed lease with clear channel. and i am summing up on page 30 of our report, we state that the airport points out that the ten million exceeds the percentage rent of nine million 337, and 11-12 under the existing lease for clear channel. however the budget and legislative analyst points out that the percent allergy rent has exceeded the minimum and guaranteeing the past if you continue to do so in the future, therefore for the proposed lease will be unlike the existing leases with clear channel. the unlikely and unlike nearly every other, lease at the airport now. which is as i state require both the percentage rent and the minimum annual guarantee. this lease would preclude, the airport from participating in higher of a percentage of rent in the future and it should be

noted that the city does get and you did not put in our report, which we should have, the city does receive 15 percent of all concession revenues at the airport. so, that is an important factor as well. the question came up from the committee about the other advertising leases in the city, as a matter of fact, every single advertising lease that the city has it does require whichever is higher. so the family and conclusion of the budget and legislative analyst, the limitation to pay the percentage to the airport and such to exceed is not in the best interest of the city. we recommend that you continue this resolution and request the airport to incorporate a percentage of those gross revenues for the provision in any new lease and, any new proposed advertising lease, similar to the percentage of the revenues which is already

contained in the existing lease with clear channel and i would be glad to answer any questions. >> i don't think that we have any. just to repeat my comments, and thank you for answering that about the other advertising contracts in the city. we will figure that out in the upcoming beak or so. thank you very much. and i know that we have a number of members of the public who filled out speaker cards and i will call your names and if you want to line up up here on the side, michelle secton and bernard, and doralyn dans and don franklin. >> if i have not called your name, i will and you filled out

a speaker card, i will put these forward here. >> good morning, supervisors. michelle secton with (inaudible) law partners. on february 8th, (inaudible) submitted the bid protest by the recommendation of the award of this lease. to the board of supervisors you have a copy of our protests allow me to crystallize the issue for you. this issue is merely and it is simply a matter of law. the law of the administrative code 25173 requires that the lease be awarded to the process. >> they submitted a methodology and failed to follow. it related to them be awarded less points than as prescribed in the rfp. the airport staffs that explained that the provision was orally amended in a non-mandatory preproposal conference as you will later

hear that is not the case. further the rfp itself provides that any changes to the rfp must be in righting. no written amendment was made to require that the board sustain the protest. we also want to bring to your attention, that this matter is properly before you. the competitive process for this lease was legally mandated by the board and our protest relates directly to whether the airport follows this problem and being submitted does not. the board's duty and the author of the legal requirement is to consider the merits of our protest, and further in 2008 our city attorney and the difference of a challenge to a contract award decision must first are presented to the board or it is waived. so we are before you to ask you

to review this matter. the city attorney is also applying that contracts with the governmental agencies are invalid if legally mandated if procedures are not followed. >> evelyn angels, and i am here to read the first hand account of the facts of (inaudible) she apologizes that she could not be here but felt that it was important to read it on record. >> may 10, 2012, i personally attended the conference to asra pacific was interested in responding to the airport's advertisement contracting opportunity. at the congress on 20 12, the presenter made the presentation with the help of powerpoint slides, she did not deviate from the powerpoints presentation and in fact, she

read directly from the slide. also, attending at the informal conference were instructed to submit any and all formally and in writing in information was presented that was not part of the powerpoint presentation. at the conference she haired what was already stated in the rfp. >> new information was not presented. i am confidents confident of this because fp the meetings and knowledge of presentation styles. i recall that she only reiterated what was listed in the written rfp p regards to the scoring minimum guarantee amount and she did not present any new information or provide any methodology for the minimum guarantee that was not included in the airport's written request for proposal. based on the request for proposal and the information received. and the informal conference. and i understood that if a proposal satisfied the minimum annual financial offer, the

proposal would get the full amount of points for the mad catecory it was never suggested orally or otherwise that the competitive advantage could be gained by exceeding the mag. thank you. >> thank you very much. next speaker, please? >> good morning, mr. chairman and members of the committee. all parties and the president and america. (inaudible) has been a partner with the city of san francisco for almost 18 years now. and we have been working with a lot of the city departments and the various diverse communities that make-up this great city. and everyone knows that the trucks that go around with our roll call 856, amendment and that is clear and on a daily basis. so the way that this process of the airport has been conducted, has come to an appointment to us because we feel that it has

been extremely unfair. and really this purpose is about that. it is not about system particularly, protesting an award that does mot come to us, this is business, you lose some and you win some and we are fine with that. in this instance we feel that the process was unfair to us and also to our partners who have joined us to present the proposal for this rfp, (inaudible) lorin davis and rovelle's business partners and they were all very much involved and creating a strong component to this proposal. what made this process, unfair really, is the one thing that this lack of clarity in this scoring rules. then, also, mentioned of they scored that were given and you know her as all track records speaks for itself and is very surprising and finally, with the mention that some of the

information that has been given in support of the process, is at times not totally accurate and i would mention the latest memo from mr. ferman mentioning four airports that would supposedly have mag only and this is not true. they all have all sorts of percentage. >> thank you. next speaker please. >> before you start, let me call a few other speaker cards. richard vancura. lance burton oscar grand and survante and denisc titan and king, and dr. seler titwell. >> good morning, members of the committee, my name is darrel davis and i am the president and ceo of davis and associates communications. and i am also contractor on the jc proposal. i was really surprised to hear from the airport speaker that

lbs were not considered a consideration in the proposal. this is very surprising to me and i would like to know why that is. that that was not a consideration of evaluation of the proproesal. jc (inaudible) went above and beyond and they included our firm in the proposal to provide advertising. that is an authentic partnership that we have with jc dco that we rarely experience with large companies and we are glad to be on this proposal and i hope that you take that into consideration. because it gives us an opportunity that we would not typically have on a project like this to be part of a advertising program that is typically held by very large firms that don't include local businesses such as mine. they have provided us with an opportunity to educate us on

some new advertising techniques. and to be able to advertise within the airport itself in san francisco. thank you. >> thank you, miss davis. >> next speaker? >> good morning supervisors. i will keep this short,vy been in the city since 1994 as a business owner, 19 years. i have tried to get a number of city contracts over those 19 years and, frankly i have never won one. >> and your name? >> bill emata i am the founder, chairman and chief collar ration of iw group and we have been here for 19 years and we have been trying multiple times to get different contracts with the city and county of san francisco each time we have failed. yet, we were one of the top five asian american advertising firms in the country and we have countries that we represent such as pacific gas and electric and coke and i was

surprised saying that mr. erm ata we want to have a partnership with the agency not only do you represent a lot of brands you are recommended as a company that donates back to the communities that they operate in but also have a lot of companies that they can bring to the airport. i was very excited about that. because this is the first time a major corporation reached out to us and said that we want a partnership and what was more remarkable about that is jcco said to us if you don't have the ability to help us with the san francisco airport, we are going to send a group of people to train your staff. >> that is extremely unusual. i have to tell you supervisor. no major corporation that has a contract with governmental agencies have ever offered to come in to our office and train our people on how to be better servants of the people of san francisco. i also wanted to mention that they are involved in the community. one of the things that i asked the president and this is very unusual because i work with a lot of companies including the

contractor that is being recommended. and i have never met the president of some of these companies, the president of this company not only met with me he spent some time with me over dinner to explain the things that they want to do and i really believe that is an important part sner ship. >> thank you. >> don franklin. and i am not a ceo i am not a lawyer, i am just a small time fishing captain at fisherman's warf. for a person who has a one boat operation i can reach the masses on a daily basis i take people fishing and i get to take them out into the bay off the coast and share with them a lot of wonderful resources and i have to tell you that people don't look at san francisco as a world class fishing destination but i fished in three different continents and three countries but this is home. this is home base and there is

nothing like seeing somebody catch a 20 to 30-pound king salmon and it is just amazing what we have just a half of a mile away and this proposal would allow not only this resource and treasure to be shared, but the rest of the world on an even better basis but for myself as a small businessman, this is big for me to have the opportunity at the airport to be able to actually advertise to the people and this proposal, for smaller guys like myself, it really helps us out. because, contrary to popular belief, it is the small businesses that keeps the city running and i am the one person guy, but my boat supports a fuel dock, a bait dock and two deck hands and a secondary skipper and a few other people and in the only that, the people get off of my boat with their fish, they get to actually say where did you get that? where did you see it? >> right here, you want to go

with that guy and there are other sites and but, they are having a very good time and hopefully if this shows, i want to show something on my iphone that we had recently. >> that is one of those world class stirgon and so we will be able to share more of this with the rest of the world if this proposal goes through. >> thank you very much. >> next speaker? >> good morning, richard ventura, former member of the small business commission and currently the ceo of the economic empowerment fund where we provide education and advocacy for the market. >> it is a strong focus on the local businesses here in san francisco. they shape our communities and we need to remember that a lot of times they are stuck to their businesses and unable to come out and have a voice for themselves. i want to show the dem graphic

data, there is 85,000 businesss in san francisco. of which, 58,000 are sole propry at therses leaving 25,000 to employ two to ten employees and there is a great opportunity to promote a lot of our local business and bring people back to the local corridors which a lot of you have witnessed in the past small business week activities. and i wanted to actually let you know that deco has demonstrated a strong, focus on local engagement, with their process. and i think that this is unique, instead of going to promoting various tourist destinations it is really looking at promoting our grassroots, local businesses which will take the people back to the local corridors which will be a benefit to the entire city as a whole. i am asking that you send this back for proper scoring and consideration. >> thank you. >> thank you very much. >> next speaker please? >> good morning, committee

superviser, lance burton, planet fillmore communications. i am a local business enterprise that worked largely with some of the small business venues and event makers here in the western addition as well as the south east communities. we struggle with the ability to promote ourselves expose ourselves through the marketing and advertising that is needed to get a grand scale audiences and to our opportunities. and as we looked at the season of african american acknowledgment, this recent few months, we noticed that it was very, very tough to get our messages out above and beyond the very, very localized participants who showed up because of our fliers or the links that we do with the internet. but when i size up the profiles of these two companies,